The home-buying process can be daunting, especially when you have to navigate complicated real estate terminology, like “REO properties,” “short sales,” and “foreclosure.” Often, real estate agents don’t take the time to fully explain all the home-buying options to clients, which can lead to missed opportunities and misinformed decisions. As it turns out, some of the best real estate listings are masked by these terms, and many of them are diamonds in the rough just waiting to be uncovered.
As an experienced and certified REALTOR®, it is my job to ensure that all the different types of real estate for sale are communicated effectively to clients as they begin the search for their dream home. At Laura Dean Real Estate, I use my experience as a Certified Real Estate Pricing Specialist, Certified Short Sale Specialist, and Certified Foreclosure Specialist to help clients find the best houses for sale in their price range. That being said, here is a brief rundown of real estate owned properties and why they’re a great option to consider when you’re looking at homes for sale in the Shreveport, Greenwood, and Stonewall areas.
What Is REO?
REO stands for real estate owned, meaning that the property for sale is owned by a mortgage lender, and that it was the result of an unsuccessful foreclosed home sale at a property auction. REO properties can be previously owned (mortgaged) houses, condos, townhouses, apartments, and even vacant land, and they are typically taken over by a bank or government agency if the previous owner could not make their mortgage payments. When the lender has reclaimed a home after its foreclosure, they can turn around and sell the house for the same amount that the previous inhabitants still owed the bank, or for even less.
Why Buy An REO Property?
There are many reasons to consider REO properties when you are browsing houses for sale, including the fact that several loans (like a second mortgage) may have been taken out by the previous mortgager. It is not uncommon for the second mortgage lender to not foreclose on the property, even if the other one did. This means that unless the second lender provides the primary lender with back payments and collects foreclosure proceedings of their own, they can be eliminated altogether. In other words, their portion of the money owed is not compensated, which can add up to a fourth of the initial home value and ultimately lower the asking price of the REO property.
Another reason to consider buying an REO property is that mortgage lenders, particularly banks, do not always hang onto foreclosed homes for a significant period of time (after all, they didn’t get anything out of the foreclosure auction). In a matter of months, the primary lender could lower the home listing price substantially in the hopes of unloading it onto someone else. This is not to say that REO properties are in bad shape — rather, they can be a hassle for banks to keep an eye on and maintain for months on end.
Find Your Dream Home For Sale With Laura Dean Real Estate
Now that you know a little more about REO properties and why they are a cost-effective option for home buyers, it’s time to expand your real estate search to foreclosed homes. Contact Laura Dean Real Estate to learn more about REO homes for sale in the Shreveport area, or start by searching online!